Estate Tax Level Not Key to Charity Bequests

As the federal government gradually increased the level of wealth heirs could receive without paying estate taxes, the share of fortunes left by rich people through charitable bequests did not seem to be much affected, according to a new Internal Revenue Service study.

But the increases in the exemption level appear to have resulted in a “slight downward trend” in the percentage of wealthy people who made charitable bequests, the IRS said.

The tax agency’s report comes as Congress is wrangling over the future of the estate tax.

In 2001 Congress passed the current estate-tax law, which gradually phased out the tax through 2009 and repealed it for 2010. However, in 2011 the current law is set to expire and estate-tax levels that applied years earlier are scheduled to go back into effect.

The House of Representatives has passed a bill that would eliminate the 2010 repeal and permanently keep the estate tax at levels that were in effect in 2009. But the Senate has not yet voted on estate-tax legislation.

While current law repeals the estate tax for 2010, estate-tax levels for 2011 would carry an exemption of $1-million and a top tax rate of 55 percent.

To read the IRS report, go to http://www.irs.gov/pub/irs-soi/09fallbuletreturn.pdf.